Perekonomian Indonesia
Indonesia Indutrialization
Created
by:
Dhea
Oktavianda (21215807)
Tiara
Fahlevie (26215886)
Universitas
Gunadarma
2016
Chapter I
Contents
1.1 Concepts and Objects of
Industrialization
In the history of the concept of economic development,
industrialization concept originated from the first industrial revolution in
the mid of 18th century in England, which is marked by the discovery of a new
method for the request, and the invention of the cotton that create specializes
in production, as well as increased productivity of the factors of production
used.
Economic history of the world shows that
industrialization is a process of interaction between technology development,
innovation, specialization, production, and trade between countries, which in
turn is in line with rising incomes encourage changes in economic structures in
many countries, from which was based on agriculture to one based on industry.
Experiences in almost all countries show that
industrialization is necessary because it ensures the long-term economic
growth. Only a few countries with a low population and abundant natural
resource such as Kuwait and Libya wanted to achieve a high income without
industrialization.
Industry and Industrialization
The
industrial sector is believed to be the sector that will lead other sectors in
the economy to progress. Industrial products always have a "base
rate" (terms of trade) high or more beneficial and create added value of
products in other sectors. This problem is caused because the industrial sector
has a very diverse range of products and is able to provide high marginal
benefits for the wearer. Business people (manufacturers, distributors, traders,
and investors) prefer to work in the industrial field as the sector provides an
attractive profit margin. Sought in the manufacturing and trading of industrial
products are also more desirable because the production process and the
handling of more products can be controlled by humans, do not depend on nature
as the season or weather. The purpose of industrial development both national
medium and long term is intended to address the problems and weaknesses in both
the industrial sector and to address national issues, namely:
(1)
Improving the working industry.
(2)
Improve Indonesian export and empower the domestic market.
(3)
Contribute significantly to economic growth.
(4)
Support the development of the infrastructure sector.
(5)
Improving technological capabilities.
(6)
Increase the deepening of industrial structure and product diversification.
(7)
Increase the industrial deployment.
1.2 Driving Factors of Industrialization
The driving
factors for industrialization (intensity differences between countries in the
industrialization process):
a.
The ability of technology and
innovation
b.
The rate of growth of national
income per capita
c.
The conditions and the initial
structure of the domestic economy. Countries that initially has an industrial
base / primer / upstream such as steel, cement, chemical, and industry, such as
machine tool production will experience faster industrialization process
d.
Large DN market share which is
determined by the level of income and population. Indonesia with 200 million
people led to the growth of economic activity
e.
Characteristics of industrialization
is the way the implementation of industrialization such as the implementation
phase, the type of seed industry and incentives provided.
1.3
Development of Indonesia Manufacturing Sector
The
manufacturing industry is the most dominant sub-sectors which contributed
immensely to the growth of industrial sector in Indonesia. The largest
contribution Gross Domestic Product (GDP) of Indonesia since the 1980s comes
from the manufacturing industry. Even in the period 1980 to 1992, the
manufacturing sector is able to change the status of Indonesia into a
semi-industrial country.
Contribution
of manufacturing industry exports continued to increase since 1983 until 1993,
with a percentage of 66.6 percent to 77.3 percent. However, in 1993 growth in
the manufacturing sector slowed to 74.8 percent and continues to decelerate
until today.
The
decline in the growth rate is influenced by the decrease of exports result of
labor-intensive manufacturing industries as a result of rising labor costs in
the country and increasing competition from countries with worker wages are
relatively lower. In the line with the improving economic conditions nationwide
supported by the strength of the domestic market of the manufacturing industry
back alive.
Since
2010, the manufacturing industry that relies on the export market back stretch
within three years recorded an increase in production growth in the
manufacturing industry. In the third quarter of 2011 the manufacturing industry
grew by 5.6 percent over the same period the previous year.
If
compared to 2009, the export amount increased by 35.4%. As of May 2011, the
export value of non-oil manufacturing sector had reached US $ 49.6 billion, up
36.3% compared to 2010. Twelve groups of commodities dominate exports of
Indonesian non-oil manufacturing industry, with a composition of nearly 90
percent.
Of
the total national export commodities, non-oil commodity gets a portion of 55.6
percent of total national exports. The export value comes from processed palm
oil worth US 87.692. There are many challenges to be faced by the Indonesian
manufacturing industry from time to time, challenges in the growth of
manufacturing industry in Indonesia is;
Human Resources (HR).
It should be recognized that the quality of human resources in Indonesia is
still very limited. It is closely related to creativity and productivity. This
condition makes the Indonesian manufacturing industry far behind other
countries such as China, Thailand, India, and others.
Marketing,
Marketing constraints still a major problem that inhibits the manufacturing
industry in Indonesia. The producers still make the domestic market as a
marketing orientation. As for opening the export market, the majority of
manufacturers still constrained market access. Until now the export target is
limited to countries in America and Europe alone, while exports to other areas
is still wide open
Quality,
Talk of quality problems, production of the manufacturing industry in Indonesia
is losing far, both in terms of quality and competitiveness of products than
similar products from other countries. As a result, the market response to
product Indonesia has become less good.
Government regulations,
Government regulation created to regulate the manufacturing industry in
Indonesia is considered inadequate and provide less protection to businesses.
Security, comfort and safety are still yet to be felt, particularly by
industrial workers. Small income, no health insurance and safety becomes a
major problem in the Indonesian manufacturing industry workers, Settlement of
disputes by the state between labor and employers virtually incapable of
protecting workers' fate.
From
1990 to 1996, non-oil and gas growth of Indonesia’s manufacturing sector
reached 12 percent per year and contributed one-third of overall real GDP
growth. This remarkable growth performance accelerated the transformation of
Indonesia from an agrarian to a semi-industrialized economy. But, after a
period of financial, economic and political crisis in the late 1990s,
manufacturing activities fell into a ‘growth recession’ and contributed
considerably less towards GDP growth.
The
decline in performance of the Indonesian manufacturing sector after the Asian
crisis is in sharp contrast to other manufacturing sectors in the region.
Together with Malaysia and Thailand, Indonesia was considered one of the “new
Asian Tigers” in the 1990s — countries that had experienced rapid economic
growth driven by the fast pace of industrialization. However, manufacturing
sectors in other countries in the region have recovered more quickly since the
Asian crisis.
Almost
all manufacturing subcategories saw their output growth decline, particularly
export-driven sub-sectors such as textiles, clothing and footwear (TCF) and
wood products. Lower domestic demand and a deteriorating business environment
in the years following the Asian crisis were major drivers of this decline.
Overall, annual export growth of nonoil manufacturing products fell from 21
percent in 1990-95 to 8.8 percent in 1996-2000 to only 5.1 percent during the
first half of the 2000s, before recovering to 11.4 percent between 2005 and
2010, mainly driven by resource-based industries
In
addition to lower export growth, rising commodity prices led to a shift of
Indonesia’s exports away from traditional manufacturing towards commodities and
resource-based manufacturing. The share of resource-based products in total
non-oil and gas exports rose from 34 percent in 1995 to 47 percent in 2010. The
share of TCF in non-oil and gas exports declined from 24 percent in 1995 to
only 11 percent in 2008.
The
recent global financial crisis was a bump on the long road to recovery for the
Indonesian manufacturing sector after the Asian crisis of the late 1990s, but
the upward trend is clear. By the third quarter of 2011, the manufacturing
production of medium- and large-scale manufacturing firms was growing at an
annual rate of 5.6 percent. Growth in real value-added was relatively broad based,
the key drivers being automotive machines and parts, with a remarkable 29.8
percent year on-year increase, followed by the chemicals sector (19.8 percent).
Taking
advantage of the positive momentum of Indonesia’s manufacturing sector will be
beneficial for income growth and long-term prosperity. Policy Note 1 argues
that this is because manufacturing offers greater opportunities for job
creation (in terms of quantity and quality), facilitates positive structural
transformation, exhibits higher labor productivity than other sectors, provides
an important conduit for social upgrading and promotes opportunities to close
the gender gap.
Part
of Indonesia’s recent upswing in manufacturing output has been driven by
increasing flows of foreign direct investment. At the start of the global
financial crisis, Indonesian net FDI inflows almost halved from US$$9.3 billion
in 2008 to US$4.9 billion in 2009. By 2011, net FDI had reached almost double
the crisis peak at US$18.9 billion. Indonesia is attractive for manufacturing
investors as a low-cost production location and as a rapidly growing domestic
market. In addition, regional integration initiatives with which the Government
is engaged make the country an attractive location for investors willing to
serve the East Asian market.
The
manufacturing sector is an important engine of quality, and fast and stable
growth for the whole economy. It is associated with a higher growth
contribution compared with traditional sectors due to its relative size and economy-wide
linkages. Manufacturing typically attracts more capital investment, driving
productivity growth and facilitating a shift from low-productivity to high-productivity
activities. Integration into global production and supply chain networks allows
Indonesian
firms to benefit from learning spillovers, which in turn fosters technical
progress and quality improvements in the wider Indonesian economy. Finally,
export growth in manufacturing is roughly half as volatile as in the commodity
sectors, leading to more stable growth.
Growth
in manufacturing creates more and better jobs. Indonesia’s manufacturing sector
directly accounted for 12 percent of total employment in 2009, compared with 10
percent in 1990. As shown in Policy Note 1, growth in manufacturing also
contributes to job creation across different sectors in the economy (mainly in
construction and transport, and to a lower extent in trade). Because of relatively
higher productivity levels, 69 percent of manufacturing jobs in Indonesia are
in the higher-value formal sector, providing opportunities to move out of
subsistence activities and raise standards of living. For secondary school
graduates, manufacturing offers the highest levels of real wages (which doubled
over the period from 1995 to 2009).
1.4 Problems of industrialization
Constraint
for industrial growth in the country is dependent on imports of raw materials
and components. The machines are already old is also an obstacle to increasing
productivity and efficiency.
These
problems had reduced the competitiveness of domestic industry. The Ministry of
Industry has been identified. The response is made Enhancement Program Use of
Domestic Products.
However,
facts on the ground short of expectations. Central government regulations not
in the line with local government regulations, In fact, among the technical ministries
not own policy-rules. On 2010-2014, the Ministry of Industry targets a 8.95
percent growth in non-oil industry and processing industry's contribution to
gross domestic product 24.67 percent. 2010-2014 total investment targeted to
reach Rp.735.9 trillion.
To
reach the target, the Ministry of Industry creates a framework of national
industrial development. The framework will be the reference for generating the
industry to prepare for free trade and the ASEAN Economic Community.
To
get ready for it all, according to Chairman of the Indonesian Employers
Association (Apindo) Anton Supit, increased competitiveness is the key factor.
Leadership, from the president, senior government officials who would wear
domestic products also should not be overlooked.
Problems
in the national manufacturing industry:
A. This
structural weakness
Ø Export
base and the market is still sempitè although Indonesia has many natural
resources and TK, but the product and the market is still concentrated:
·
Limited to four
products (plywood, apparel, textiles and footwear)
· Textile & apparel
market limited to a few countries: USA, Canada, Turkey and Norway, USA, Japan
and Singapore imports 50% of the total exports of textile garments from
Indonesia.
· Products contributed
80% of manufacturing exports Indonesia still easily affected by changes in
market demand for the product is limited
· Many elected
labor-intensive manufactured products experienced price declines appear new
competitors like China and Vietman
· Traditional
manufacturing products decrease our competitiveness as a result of internal
factors such as demands for wage increases.
Ø Very
high import dependence
1990, Indonesia
attracted a lot of foreign investment to high-tech industries such as
chemicals, electronics, automotive, etc., but still the process of merging,
packing and assembling the results:
·
The import value of raw
materials, components and intermediate inputs are still higher than 45%
· Labor-intensive
industries such as textiles, apparel and leather dependent on impor of raw
materials, components and intermediate inputs is still high.
· PMA manufacturing
sector is still dependent on the supply of raw materials and components from LN
· The transition of
technology (technical, management, marketing, organizational development and
external linkage) of FDI is still limited
· Development of products
with its own brand and network developmen marketing is still limited.
Ø There
is no medium technology industries
· Contributions medium
technology industry (metals, rubber, plastics, cement) thd development of the
manufacturing sector declined in 1985 -1997.
· Contribution of
capital-intensive products (material of plastics, rubber, fertilizer, paper,
iron and steel) thd exports decreased in 1985 -1997
·
Production dg low
technology products is growing rapidly.
Ø Regional concentration
Medium and large industries are concentrated
in Java.
B. Organization
Weakness
· Small & medium
industry is still underdeveloped, low productivity, Total Labor is still a lot
·
Market concentration
·
The capacity to absorb
and develop technology is still weak
·
HR (Humanity Resources) weakness
1.5 Development
Strategy and Policy Industrial Sector
1.
Import Substitution Strategy
More
emphasis on the development of industry-oriented domestic market Import
substitution strategy is the domestic industry that makes replacing imported
goods Based on the idea that the high rate of economic growth can be achieved
by developing a domestic industry that produces goods import. Consideration
should be used in choosing this strategy are:
a. SDA
and other production factors (mainly labor) provided enough
b. The
potential of domestic demand adequate
c. Driving
the development of the domestic manufacturing industry sector
d. With
the development of domestic industry, job opportunities more widely
e. Can
reduce import dependence
2.
Implementation of the strategy of import substitution and the results in
Indonesia
National
manufacturing industry is not well developed during the New Order Indonesia's
manufacturing exports is not well developed excessive protection policies for
the new order raises the high cost economy the technology used by the domestic
industry, highly protected
3.
Export Promotion Strategy
More
oriented to the international market in the development of domestic enterprises
there is no discrimination in the granting of incentives and other facilities
from the government was the notion that economic growth can be achieved if
products made domestically sold in export markets export promotion strategy to
promote flexibility in shifting economic resources that exist following the
change in the pattern of comparative advantage.
4.
The policy of industrialization
The
destruction of foreign exchange system so that foreign transactions more free
and simple reduction of the special facilities made available only to State
enterprises and policy governments to encourage private sector growth together
with SOE.
Chapter
2
Case
Indonesia
asks S. Korea for helping hand on industrialization
Indonesia
has invited South Korea to help accelerate industrialization in Southeast
Asia's largest economy.
In
a bilateral meeting with South Korean President Park Geun-hye during a working
visit to Seoul on Monday, President Joko "Jokowi" Widodo lauded
ongoing South Korean investment despite an apparent decline in trade between
the two countries.
In
2015, the value of Korean investment in Indonesia stood at US$1.21 billion,
compared to $1.12 billion in 2014.
"Banking
on the prospects of welcoming South Korean investment to the industrial sector,
Indonesia intends to make South Korea a partner to accelerate industrialization
in Indonesia," President Jokowi said.
Steel
was among the focus sectors for Indonesia, Jokowi said, adding that the country
expected to reduce its steel imports by developing its own domestic steel
industry.
Hence,
he welcomed steel firm POSCO's decision to expand its plant in Indonesia,
working together with Krakatau Steel, in order to produce 10 million tons of
steel.
"I
believe POSCO's expansion plan will run smoothly and encourage the
establishment of an integrated steel industry from upstream to
downstream," Jokowi said.
In
the creative industry, he invited South Korea to cooperate in capacity
building, technical and technological assistance, cobranding and coproduction
programs in a bid to realize his vision of making Indonesia the biggest digital
economy in the region with a projected e-commerce transaction value of $130
billion through the creation of 1,000 technology-based entrepreneurs by 2020.
During
the working visit, the two countries also signed an agreement on maritime
sectors, especially illegal fishing and fisheries processing.
Indonesia
and Korea saw a decline in trade value to $16.7 billion last year, down from $
22.47 billion in 2014.
"We
should maintain our efforts to increase trade [with South Korea],” said Jokowi,
adding that efforts included reducing tariff and non-tariff barriers.
This
year, the Indonesia-South Korea relationship celebrates 10 years since the
signing of the Joint Strategic Partnership to promote Friendship and
Cooperation in the 21st Century on Dec. 4, 2006.
President
Jokowi’s visit to South Korea aims to show Indonesia’s commitment to improving
bilateral relations.
During
the meeting, President Park expressed her intention to increase investment in
infrastructure, including in the maritime sector.
Analysis:
The
visit to South Korea has made a number of bilateral agreements between these
two Asian countries, with the leaders of large companies in each country. In
essence, between Indonesia - South Korea resulted in a strong commitment
between the two governments in order to enhance cooperation in various fields.
Two cooperation priorities is the acceleration of industrialization and the
development of creative industries.
The
commitment was outlined in a memorandum of understanding signing of seven in
the maritime field, creative industries, sport, geospatial, special economic
zones, restoration, and fighting corruption. According to the Minister of
Foreign Affairs (Retno Marsudi), who accompanied the visit, that the way in the
Republic of Korea seemed too high enthusiasm of private entrepreneurs South Korea.
References
The
World Bank Office Indonesia. Reviving
Growth in Indonesia’s Manufacturing Sector. 2012.
http://softwareaccountingsurabaya.com.
Perindustrian manufaktur yang berkembang
di Indonesia.
rowland_pasaribu.staff.gunadarma.ac.id. industri-dan-industrialisasi.pdf
kuswanto.staff.gunadarma.ac.id. 7 INDUSTRIALISASI DAN PERKEMBANGAN.
http://www.thejakartapost.com.
Indonesia asks S. Korea for helping hand
on industrialization. Ayomi Amindoni.
